lot of waiting and seeing. their bank stress test coming out. possible moody's downgrade. red arrows giving up a lot of the gains made yesterday off the spanish budget proposal. spain down 1.2% in fact. a road map this morning starts off this morning with a stock that was left for dead. research in motion surging on earnings that were better than the disaster most analysts expected. r.i.m. gaining subs and adding cash with no phone to sell during the holidays and pricing pressure from all sides. is there more trouble ahead? >> just don't do it. nike beats on earnings but can't drum up enthusiasm as margins drop 80 points and futures show it in china. can the massive buy back reinvigorate the stock? >> moody's could hit spain. could markets hold on to the big gains made yesterday off the budget plan? >> just hours to go until we close the books on q 3 the dow up 11 of the 12 months. what is the fourth quarter historically bringing?

we'll tell you. first some news out of apple. ceo tim cook officially issuing an apology for the maps app cook saying, quote, with the launch of the new maps last week we fell short on our commitment to our customers. we are extremely sorry for the frustration this has caused our customers and are doing everything we can to make maps better. this is significant. if only symbolically, guys, david, jim, we don't hear apologies out of this company very often if at all. >> there has been very little to apologize for. this is a true gaffe. those who have read the fabulous book would know steve jobs i believe would never put an inferior product in people's hands even if it meant an apple product that he could lay claim to. and this was a major departure. we saw this with microsoft. jobs would make deals with microsoft. he didn't want to make a deal with microsoft but obviously if it was a better product he did it. >> yeah. he did. and people have raised the question as to whether steve jobs was still alive and running

the company whether maps would have been released in this state or he simply would have said you stink it stinks you're fired make it better. >> you stink and i don't like you. >> also in the book it was very clear steve jobs had, not had it in for but really watching android, wanting to block that out as a competitor. this was one way of keeping google a competitor off the apple ecosystem and a lot of people on the google side would say dan niles, we talked to him earlier this week, said know what? being locked out of apple ecosystem is not good for google so maybe it was driven by that. a mistake at this point but perhaps driven in part by that. >> there are a lot of reasons to try to cut out google. these companies are at war. >> yes. >> one of the things steve jobs talked about that he wished he had done, he mentions this near the end of the book, wishes he had been willing to partner more, he had been less at odds. this may be an example of a

phone that frankly people are not going to be as crazy about. and look, i don't blame them. i'm not going for it. no way. >> at this point, playing an apple berry right now and i'm agnostic about this but if you look at tim cook he put the maps out before it was ready for primetime on to the phone. >> right. >> he also pushed the phone out even though there were supply problems with some of the components namely the lcd in cell technology display screen. all of those reports are coming out now about how perhaps there aren't enough screens out there for the phones. he is an operations guy, tim cook. he has made possibly what could be considered two errors when it comes to this iphone 5. do you become more skeptical now, jim? >> well, look. it's got great demand. i think that i've always been concerned at what point does the steve jobs legacy run out? tim cook was really running the company for very many years because of jobs' illness. look, it just shocks me. do i want to just -- the company made an apology. it's pretty clear they're going

to fix it. if they fix it then people will want the iphone 5 but i think this was a cut the nose off to spite their face situation. i don't like it. >> they got over the antenna problem very quickly a couple years back. they did hold a press conference and say we made a little mistake. i guess they kind of admitted it and moved on and so did the consumer in terms of saying fine we give you a pass. >> and the shareholder. >> the more customers use the map apps on apple the more refined it will be the better it will become. we've talked before it's largely been a function of time in this space that has given google the advantages it has right now. >> i'm reluctant to turn on apple because they apologized and i think they'll get it right. at the same time as a person who is addicted to apple what keeps me from upgrading other than the fact you can't get one. >> apple products. >> what makes me wary is because that is a primary characteristic that i liked so, so much. it's kept me from being lost in

many countries in many places and i'm just shocked that apple wasn't ready. >> you still can get google maps. you just have to download it. you can still get it on the phone can't you? >> there is a way you can get it but i think they -- you don't expect anything other than the best from apple. >> no we don't. >> they didn't give us the best. they've apologized and i bet you they solve it. i bet you a year from now we will not think of this or six months. i remember the antenna was one of those stories we devoted a day to. >> but for now when it comes to a stock perspective we have aside from yesterday every single day this week we had losses for shares of apple after the initial sales numbers came out from the weekend. so you have to, i mean, you have to be concerned especially with large numbers reaching a record high. how much longer can this juggernaut go? you know, you have to wonder if you take profit from this point. >> i'm an investor. not a trader. great story. i do believe tim cook will solve this. the stock has been hit. you have to jump in right here?

no. but i don't think that this is a problem of a magnitude that they can't get around. it's just you hate to see them stumble. this has been the most perfect story in the market. and i know there's technicians who say it is going to hold this or that. i think you invest in it and if you don't own any, it comes down on this you can probably start buying some. but i'm let down. >> all right. let's move on to research in motion. the shares are surging premarket. the blackberry maker posting a much narrower than expected loss with second quarter revenues handily beating forecasts and the company did see cash on hand rise from the prior quarter. r.i.m. ceo hines on "squawk box" an hour ago. >> it was an important first step to execute prudently against this quarter and the challenges but there are many more steps to come until we launch blackberry 10 and then i think the market will be very excited about what it has to show and what it will deliver to its customers. >> one of my favorite notes this morning about the r.i.m. quarter

was from mkm, raising the odds of r.i.m. surviving its troubles up to 20% to 30% from 5% to 10%. >> silly thing to do. >> i like the giants if you get two and a half i don't like them if two. reference the eagles game on sunday on nbc. okay. here is my take. until i saw becky's unbelievable interview with the ceo i was prepared to say, listen. this blackberry 10 is going to come out. all is well. he could not give you a date for blackberry 10 which worried me. that's it. cash is building. 80 million subscribers. 3.5, $4 billion valuation. key board that is excellent. someone is going to buy it. >> really. >> someone is going to buy it. >> the other day i talked about the stock was six and change. it's moved up since then but it is all about the blackberry 10 in terms of the viability of the

company. >> yes. that's it. >> great call. it was a great call. particularly because operating cash flow is good. they've managed to stem the losses. i had no idea how much fat they had. all these different assembly places. they're only half way done with the firings. it was a very impressive quarter from the point of view of survivability. i think that fellow you mentioned is a little too negative on the stock building. look, there are people who love the darned thing. becky is interviewing the ceo. >> her first question out of the gate was i am devoted to the blackberry as am i. i have mine onset. i love the key board as she said but i am seriously considering going to the iphone 5 and that encapsulates the problem here. if this is the only thing keeping me from holding on to this, that's bad. >> there will be a qwerty edition as said this morning. they'll just try to get a share of the touch screen market in the united states. to your point about cash going out, more smart phones being sold than expected it is still a big shortage so the move today,

is that indicative of -- >> they're not going out of business. >> even though the core operations remain unprofitable. their cash build was 2.3 from 2.2 on the quarter. >> they had more cash than previously. >> and their shipments continue to go down. they bleed people. >> you have the developing countries now. >> the pricing pressure is greater. >> there's always ban thought someone would buy them. but people felt why buy them because they'll run out of money and when they run out of money you can get them for nothing and you get all that intellectual property for nothing. there's a lot of companies that wish they had that keyboard patent. maybe that is worth something. i'm just saying that, look. i want the blackberry 10 to ship earlier. i thought becky's interview was terrific. it's very difficult to be as negative as you might have been before knowing that the restructuring is not that far along. they're still going to be firing

people. they do have more cash than i thought. this is not nokia. >> they did not offer great specifics on how far along their strategic review is. >> right. >> there was not a lot of specifics about average selling price. we don't know how much pain they're going through to move these units, jim. >> no. >> but you still think the takeover dynamic exists? i think it is a better story than yesterday. >> it is. >> i went through and parced every line in the conference call and the takeaway for me was okay look. we're not dead yet. and i thought they were dead. as you talked yesterday with intellectual -- i thought, look. there's nothing here because they'll be bleeding so much that by the time blackberry tank comes out they'll be talking about how they need to do an equity offering so why bother. they don't need to do an equity offering. >> just yesterday we were talking about the drawdown on cash and the fact they had a credit facility which remained on tap. things looked that dire 24 hours ago. i talked to him right after the quarter was reported and he said this shows r.i.m. can operate in survival mode and do okay. that sort of says it all. >> 80 million subscribers.

they're not going down. countries are addicted to the thing. latin american, indonesia. >> jakarta. huge in johannesburg. >> yes. >> we know there is a big infrastructure. come on. growth market. byod. bring your own device was talked about and the idea is there could be, you could own the apple and also have a r.i.m. i don't know if people will really have two devices. look. i came in thinking this is a dead company. and what i came back with is there is a pulse here and the pulse is going to last a little bit so if did you want to, you may not be able to buy -- >> let's goet to nike before we run out of time. falling in the premarket. the apparel maker says gross margins depressed by higher material and labor costs as well as a shift to lower margin businesses and nike says future orders came in 6% above a year ago levels. 80 basis points, jim. >> i'm shocked at this. >> you were shocked at it. >> china real bad.

i don't like to see gross margins declining. we always want to hear that things are, the gross margins are expanding. they couldn't do it. they didn't explain that well. they did have phenomenal growth in new york america and tried to gloss it. the call was highly promotional. i hate to see highly promotional calls from a very fine company, $8 billion buy back. clearly not a signal that things are better although i ought to tell you if you listen to the call they were like in, hey, listen, bye-bye mode. this was the olympics. you thought they would have picked up there. i was not impressed with nike. you didn't get a lot, you know, youngs even going down. >> did you interpret because north american brand revenues were up 23%. is this all an international is bad story and things are okay at home? >> to me it means pricing. they're charging too much for the shoes. we didn't know about inventory numbers in china. i came back and said this is one of those deals where it is all about that maybe nike got too

expensive. maybe their shoes are too expensive. >> it's possible. >> right? >> how much do they cost these days like the new lebron. >> i don't know. i don't like to think about it. >> want new sneakers all the time but nike is not amongst his -- >> really. the nfl. >> i came away and said gee i wish they were a little more sick um spectrometry in sales. r.i.m. i didn't think was promotional in the conference call. becky was very promotional. >> hard for r.i.m. to be promotional. >> well, basically talking about if you believe in fire and able to survive and nike was talking about how this is a great number. don't look behind the curtain. obviously people are and not liking china. >> united continental is the first u.s. airline to get the boeing 878 dream liner. the ceo is with us with an exclusive how this could become a game changer for the airline, passengers, and investors. take a look at the futures. last one you'll get for the

third quarter. we'll talk about what the quarter end may mean when "squawk on the street" comes back in just a moment. [ "the odd couple" theme playing ] humans. even when we cross our "t"s and dot our "i"s, we still run into problems -- mainly other humans. at liberty mutual insurance, we understand. that's why our auto policies come with accident forgiveness if you qualify, where your rates won't go up due to your first accident, and new car replacement, where if you total your new car, we give you the money for a new one. call... to talk to an insurance expert about everything else that comes standard with our base auto policy. [ tires squeal ] and if you get into an accident and use one of our certified repair shops, your repairs are guaranteed for life. call... to switch, and you could save hundreds.

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the markets set to wrap up a bullish third quarter rebounding from a negative second quarter. so far the dow is up #.7% in q 3

and the s&p 500 gained more than 6%. the nasdaq up almost seven. for all three indices it marks a fourth consecutive month of gains. so much for the third quarter for september being a bad month. >> sales in september didn't really work. i think there were a lot of people who feel the market has moved too much. you get spain having decent -- a decent reorganization. you get china actually doing some stimulus as opposed to -- >> we now have a date for the national congress. >> right. i start thinking, look. there is no reason to think this is all going away. i just don't think it goes away. >> largely central bank fueled. >> only game in town. central bank bull market. >> goes back and looks at every presidential election year i think going back to '28. s&p the first half peak is normally april 6th. this time it was april 2nd. second half peak is normally september 7th. this year september 14th.

the pattern and it usually comes with a nice fourth quarter, they say obviously history doesn't always run exactly but pay attention to some of these patterns. it's shaping up to be historically a recognizable year. >> i thought it was interesting. the one difference is that, oh, boy. i hate to say this because it is not meant to be nonpatriotic but we are not as important to our equity markets as we were. we are -- we see our markets, we were doing fine. it's been a long time since this period obviously but where i look at the european market i see spain down and i see a seller market. we're not charging and i don't even want to for a moment pretend we are. >> speaking of which european markets are moving a little bit lower. we'll wait for the results of spain's bank stress test due out in about three hours from now. i think noon eastern time. anxiety surrounding those tests comes one day after the upbeat reaction to the new budget there which includes the new round of spending cuts as the country hopes to avoid asking for a bailout. the big headline yesterday of

course, guys, was, david, rating some of the social security funds or pension funds to meet their targets and a lot of discussion today whether the tests are credible, whether one of these 14 lenders fails, or not. the same discussion we had in this country a couple years ago. >> yeah. although of course when we looked back at our stress test we feel like that was a real confidence builder because they were believed to have been accurate whereas europe has already done a couple rounds that were deemed otherwise. this, though, may be different. this is an outside firm, and they are supposed to -- at noon eastern i think we'll find out some of the results. that of course is related to the overall bailout, what they can use or not use to help bail out the spanish banks. so many different cross currents in spain. it will be very interesting to see how they navigate that and how it ae's navigated given whas going on among the public as well. >> i always think the hope is they have two very strong banks

bvd and -- they've held up really well and they're raising money in mexico, could raise money in the united states. i have to tell you if they wanted to they could do what we basically did in this country ultimately which is give wells fargo 30% of the market. sheila baer obviously arguing was that right or wrong? bank of america huge part of the market. jp morgan huge part of the market. they can split this country. remember britain four banks maybe spain two banks. consolidate. take the bad loans. many people feel this is too far to the left. i like his view on too much austerity. there is hope that spain only needs a couple banks to make it. >> housing has yet to bottom in spain which is an important one. one of the proposals roy has is actually eliminating a tax break for buying a new home which does seem to go against what you might anticipate given they're still trying to, they had a housing bubble like we did but are not on the other side of it yet. >> timothy geithner, i don't

know if anybody remembers, the vociferous nature with which he said if you questioned his stress test, listen, this is 1932 numbers. you don't know anything about what we're doing. yeah. turned out he was completely right. >> we got the expletive. >> this is a family oriented show because the kids are all home watching us instead of going to show. >> all right. how do you end the third quarter on a profitable note? find out from cramer. his mad dash is next. meet the head of the blackberry mak maker's fan club. let's take a look at futures as we head to the last trading session of the week and for the quarter looking at a down open. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies

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we missed him for the past couple days but he is back to close out the week in style, jim with his mad dash watching sysco and some people saying nice things. >> two firms saying nice things as i listen to tom and think about the google maps. morgan stanley and goldman both say, listen. it is going to be good. when you see this, when you see two different firms saying it, it no longer feels like like, hey, this is just six or a half dozen. this is like go buy the stock. we have two firms say it. stock is inexpensive. >> people are also talking about an era beyond chambers when he leaves. does that weigh on you or not? >> look, i think that when he left and chambers came in this company knows transition. it knows how to do it.

>> all right. let's talk some mcdonald's. oppenheimer comes out today. >> wow. >> and says, is it oppenheimer or jeffries? >> januaryinthis is unbelievabl. we thought mcdonald's was having a resurgence. they say the last two or three weeks, the first two weeks of september, three weeks. the worst for the burger sector all year. this one could give up the gain again. i mean, it had been stabilizing. you met management. i still think, i believe this this stock. but this was devastating. >> you were buying at 85 originally? >> left the stock. had a nice gain. travel trust. why did i leave it? there is no sign of a real turn. just seems they had gotten cheap on evaluation basis. this is what i most dreaded the idea september is going to be tough. >> we'll find out. >> i don't know. mcdonald's is hard to game. may not be the best burgers. that dollar coffee is sweet. a sweet deal. >> we'll get the opening bell in a couple moments. can the dream liner wake up united continental's business? we'll talk to the ceo.

then the r.i.m.-pyre striking back. joined by the head of the ever optimistic blackberry maker's fan club. if apple maps has lost something in translation a new competitor promises to pick up where the conversation left off. opening bell moments away. we don't call this our company, we call this our mission. green toys teaches children that if i have a milk jug and i stick it in the recycling bin it can turn into something new. chase allows us to buy capital equipment to be able to manufacture in the states to the scale we need to be a global company. with a little luck green toys could be the next great american brand. find what's next for your business at chase.com/mainstreet

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there ar lot of things that are right in the world today. it is a friday. the refs are back at work in the nfl. and on this last day of the third quarter the dow and s&p ontrack for the best monthly gain since june. this is the fourth month in a row. the big boy this morning the k shields and mainstay investments subsidiaries of new york life celebrating a recent launch of the mainstay municipal opportunities fund. with the nasdaq, starbucks celebrating a third anniversary. the instant coffee and recent launch of its system for at home brewing which by all accounts is getting off to a good start. >> yes.

a big leadership conference coming up at starbucks. i believe in howard schultz. came on our show. i like this product. i like the fact europe might be turning. mostly i like the fact that when he gave one of these big meetings in new orleans a couple years ago, to get united states jump-started, it worked. i think he's got a clear bet. i like starbucks. >> you mentioned the possibility of europe turning. that certainly is not how oppy sees utx today. downgrading, cutting estimates. says the industrial businesses in europe and china in their words stuck in the funk. what does that mean? >> you know, united technology brought that on themselves and not as positive with companies like general electric. get that document. get the slides. ge is saying, this is going to be a huge year. united technologies not saying. >> the meeting yesterday, industrial businesses, jeff himmel had propelled the stock up as much as 3.5% at one point.

ge shares still up today by another ten cents. $22.82. haven't seen that number in some time except on the way down. >> yeah. a lot of good things. very late to liquify natural gas. very linked to turning enjinx. we have some conversation about an aircraft later. look. this oil thrust they're doing as i think they're going to make a series of acquisitions in the service area. these will really help. >> nike shares no surprise are trading lower this morning. you know, last time when nike hit, immediately you think of what's going to go on at foot locker and finish line. finish line actually came out beat on expectations for revenue as well as the eps side and then raised its forecast for the year saying it will be the exclusive in store shoe provider for macy's which could add as much as $350 million in revenue per year. finish line finl is trading down about a percent or so.

>> can't distinguish yourself from nike until it hits the scene. nike north america was incredibly strong. this seems like a wrong call. i would not, i just think this is a -- you know, i think the market will come to its senses and realize there was a good quarter finish line. don't equate nike. you can equate yum. i see people doing that. >> north china sentiment. we mentioned apple. they take a look at qualcomm and say the near-term concerns about iphone shipments are what they call a rough patch for the stock. they think it is going to be temporary but in the near term they keep their buy rating though. >> the sky works solution fund through this apple correction, they want to link it to qualcomm now. going back to what we talked about, a rare mistake by apple. a correctible one? look. i don't think tim cook's credibility should be on the line. he's done a lot of things right. he made a mistake. he's owned it. i'm not going to give up on apple. >> talking about corrections

i've been noted via twitter by various people that you cannot really successfully download on 6 the google map application. so another correction for you. >> i'm not leaving the 4 s. >> because of the maps. >> i need maps. the phone was on hold at best buy. they're not taking orders. >> have you felt how light the 5 is? >> so light. >> you wouldn't even know it. >> look, i'm a google map -- okay, look. you fix it i'll upgrade. >> so you won't upgrade because of the map application. >> i am going to be in boston tomorrow and i don't know my way around and this is how i get around. this is what i use. i use the blue dot. it tells me where to go. i saw you at a movie the other day. i said, you didn't know where the theater was. i didn't know. >> i was wandering 56th street and you're lisk the blue dot says this way. >> the blue dot tells me more than i know, david.

i rest my case. >> like a spin-off show. the avengers of faber and cramer. >> two scrooges. >> shopping, going to the movies. yeah. >> wow. shopping with me? i'm going to pier one this weekend to get my decorations. want to come? >> can't you do better than that? >> no. >> let's check in with bob pisani on the floor this morning. >> good morning. what happened to the idea that september was the worst month of the year? remember what we were doing a month ago? we were all standing here saying okay. september is going to be the worst month of the year historically. we know the global economy is weakening. everybody came on our air saying hey. short the global economy. this did not turn out to be such a good theory did it? right now, 2.9% for one of the best months of the year. not the best month but among the better months of the year. what were the two biggest gains we had this month? the two biggest days? september 6th? that was the day draghi announced the bond buying program. biggest gain. second biggest gain september 13th the day of the fomc

meeting. what does this tell us? it tells us what matters in the world is central bank intervention and also what's going on in europe. what was the worst day this year? it was tuesday, the day we saw the riots in madrid because that's the day everybody said uh-oh. this whole deal with spain and this careful choreography moving toward help from the eu could fall apart. turns out maybe it's holding together a little better than anticipated. my point is what moves the world is central bank intervention and what's going on in europe. to play against that is very, very dangerous. there is another theory floating around that also hasn't done very well this month. the invest usa theory. this theory makes a lot of sense. the idea has been around for months. the global economy is a major problem. the u.s. is less of a problem. therefore invest in the united states. so, for example, go long consumer discretionary stocks. go short material stocks. because material stocks have big exposure to the global economy. like i said, in theory, this made sense.

the problem is we don't live in a perfect make sense world. we live in a world where the central banks are intervening. because the central banks have been intervening the dollar is weaker. commodities are up. and so whole swaths of the sectors in the united states are doing better. we see material stocks up in this quarter nicely. discretionary stocks are up nicely. energy stocks. tech stocks. whole swaths are up not necessarily any particular sector winning or losing. what about the rest of the world? the theory the rest of the world is going to collapse? that hasn't happened. germany has out performed the s&p. germany is up 13% this quarter. we're up 2.9%. brazil is up 10%. spain is up 9%. whole swaths of the global stock markets are doing better than the united states. like i said, it's about the central bank intervention. end game may be different. not getting into the morality of this. i'm just pointing out what the numbers are saying. two theories have been wrong so far. let me make a quick comment about what's going on in spain. we'll get the results of this so-called bank audit done about 14 banks to try to figure out

how much they need to recapitalize. we all know the numbers are going to be wrong. the numbers $40 billion, 60 billion euro. ludicrous number. they're going to create bad banks where they'll sequester most of the toxic assets. does this make a lot of sense to you? in theory, they're saying they could do it but it means the bond holders are going to take huge hits. it's not clear they're going to allow -- be allowed to do that since the bond holders themselves are often the depositors of a lot of these banks. we'll see. this is a very nice little idea that they've set up here but i'll bet you that getting from right now to the execution is going to be very, very difficult. guys, back to you. >> great run down. >> it's true. the european markets are so much better. really, bob. let's head to the bond pits. i have regards from my father to you rick santelli in chicago. he says you're doing a great job. go ahead. >> thanks, jim. the treasury market is doing a great job of going back into a free quantitative easing 3 range. if you look at it intraday you can see we're down several basis points, bouncing off our low

yields which coordinated with the data but probably also coordinated with the equities of influence on the fixed income markets. if you open the chart up a bit, this pattern according to many technicians looks as though we'll probably see a little bit more slippage in yields. keep that pattern in mind. probably down into the 150s. if you look at the boons both patterns the same. 24-hour chart, bounced around the same time. and where the treasury tenures are down two on the day down about 13 on the week, it's a very similar boom to open the chart up. down about two in the boons about 144 ran down about 14 baseies points on the week for bunds as they do the post reaction to the package yesterday in spain. look toward the bank stress test. the last two charts are really important because quantitative easing isn't unique just to the u.s. or europe. probably japan should be in that group too. look at the 24-hour chart. about midnight we traded down around 77.44. if you open the chart up you can

see why this is important. because on the 13th is where we created a seven-month low and we're back down testing it. you know, quantitative easing is going to pit developed nations against asia. great "wall street journal" article today on that very topic. now we're going to go to david faber who has some legal news regarding bank of america. >> indeed we do mr. santelli. a big number associated with the settlement by bank of america against a class action lawsuit by share holders of the bank. only less than a month before a trial on said lawsuit was set to begin. $2.34 billion is the number. and i got to take you back to 2008. you'll remember the date of course. we actually celebrated the fourth anniversary not long ago. lehman brothers had just filed for bankruptcy and out of nowhere ken lewis decides he is the ceo at that time of bank of america to pay an astounding $29 a share for merrill lynch. 0.8595 of bank america shares for each share of merrill lynch.

yes a 70% premium for bank many thought was maybe 24 hours away from going belly up itself. share holders didn't take kindly to it but approved the deal only to find out not much later that things at merrill lynch may have been worse than they thought. now bank of america has not admitted in any way, shape, or form it misled investors at that time but certainly the losses piled up at merrill's books and therefore piled up on bank of america's books as time went on. one of the worst deals of all time. lewis may have done two. not just merrill but of course countrywide. merrill has turned out to be a good deal in many ways for bank of america but the company itself has suffered as a result perhaps of the losses. hence, today's huge settlement, unclear what we would have found out at trial but let me tell you at least on the part of a couple analysts, david tyrone who is negative on b of a shares saying the settlement is far larger than expected given the weak merits of such suits and historical precedent. as for what it means from the third quarter there is going to

be a charge of 28 cents a share pretax about $1.9 billion. that includes other things. it was a $1.6 billion addition beyond what they've already reserved for litigation. but you've also got negative impacts and we'll see this a lot come reporting season from the banks of the tightening of the credit spreads at b of a and it'll be the same at morgan, the same at goldman and jp morgan because of what's gone on during the quarter there. what does that mean? more expensive to buy back their debt hence they actually have it recorded as a charge. get that 800 million for uk litigation as well or tax charge. and so you get that 28 cent charge. that's not just including though this settlement. let me tell you the settlement itself at 2.34 billion, put it in some perspective. we've got this. you want to see bigger ones? there are only a handful. send it. worldcom. >> wow. >> tyco. and bank of america. >> that is not --

>> the then u.s. attorney chris christie, oh, man you don't want to be in that group. >> no you don't. for its part bank of america is saying we want to put this behind us and clean the slate. they've done that. the stock as you see down a bit but not sharply. they also have significant litigation of course for the putback issue which they hoped to put behind them in the past. that is the mortgages issue. that does emanate from the countrywide deal. there is a look at b of a shares. we'll see. the market not responding badly but that is a big number. much larger than had been anticipated. >> yeah. and take a look at the banks across the board today having a really tough time after yesterday's big rally. so the 1% decline. >> really. >> it's in line with what the sector is doing. >> very good point. >> not to mention that for the month and for the quarter b of a one of the top performers on the dow. i think it goes jp morgan at the top. th then procter & gamble. >> procter & gamble, jim. >> took them off the wall of

shame the other day. >> yes i did. >> you took them off. >> yes. i think the restructure was meaningful and had a little more to do with the bloated structure and i think he is addressing it. he also like tim cook has owned the mistakes. i like that. humility ain't a bad thing. that was in my show. you may have missed it. i will point out that bank of america i usually am not a technician but this is the level that technically it's supposed to hold. so it doesn't surprise me it's making a stand here. >> in terms of data around the world we've not mentioned some negative industrial production numbers out of not just japan, jim, but south korea as well. we did get income and spending. we'll get chicago pmi in a moment from rick santelli but spending, the savings rate in this country has gone from 4.1 to 3.7 as spending out paced income. doesn't bode well for the fourth quarter although you could easily come back and say the market has little to do with what the economy is doing right now. >> you have to be fighting the fed, the ecb, the japanese, the

chinese. you really are fighting a lot of government in your face. listen we're not going to let this thing go. >> and then this great piece in the journal today about how bernanke turned some of the hawks into doves on this recent call picking the -- calling them from the office on the weekend so they didn't recognize the phone number. they picked up the phone. prosser and evans going to golf together. very interesting stuff. by the way, chicago pmi. let's get to santelli. >> awesome. whoa. hey, you guys coming back? all right. here we go. we have september. chicago purchasing manager and it is a big number. but not in the right direction. 49.7. the last time we were under 50 for the chicago purchasing manager survey was september, 2009. september, 2009. so this is a shocker and this of course comes from a level of 53. prior to that 52.7 from may was the lowest going back to that

september, '09 level. so we want to really factor this in. i'll tell you what is surprising. the s&ps and the dow started to deteriorate minutes ago so once again a lot of clairvoyance out there. you want to really pay close attention here. we could do some damage to the equities but, more importantly, we want to make sure we pay attention to whether or not that ten-year breaches the 160 yield mark. back to you. back to melissa lee. >> thank you, rick santelli. we are looking at a loss of about a hundred points on the dow now down about 10 on the s&p 500. we'll of course continue to track the market reaction to this worst reading last time under 50 since september of 2009. much more for you on the two big tech stories of the year. also steve jobs as you have never seen him before. you'll see what we're talking about right after this. as we head to break look at this morning's early movers on wall street. now, that's what i call a test drive.

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take a look at the data feedback. ibm up by a third of a percent and cisco systems a big gain up by 1.6%. if you're just tuning in chicago pmi coming in at 49.7 for the month of september and that is the first time that we've seen an under 50 reading since september of 2009. jim, your immediate reaction was wow. this is bad. >> yeah. this is the kind of number that says we're going the wrong way. >> yeah. >> and that maybe we'll hear it's fiscal cliff. maybe it's our trading partners but this is the kind of thing which says ben bernanke knew what he was doing. those of you who are very critical of the fact that he wants to be so accommodating, i think he is a little seer like. i think it's a pretty good call by him chlgt. >> although as we've said at this table, if you ran cramer motors, right, and you were worried about inventory levels post cliff, would you be ramping up production right now? probably not. >> no. i mean, this is the kind of number which is going to make a

lot of businesses pause, small businesses pause, and, look. it's also an election number. i think that if romney were able to capitalize off something he could capitalize what is obviously a deceleration in the economy and in the election. >> when we come back we're just minutes away from another data point. this is going to be breaking news on consumer sentiment followed by something we've all been waiting for. coming up how many stocks can you talk about and how fast can you do it? see if you can do it better than cramer. six stocks in 60 seconds. when "squawk on the street" returns. ♪

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let's get to six in 60. mccormick still a name you like. >> this is what you buy if you're worried about the pmi. caterpillar neutral to buy. >> no surprise. >> also b of a on deere and echo. >> corn prices going higher and this makes sense. reports this week in mosaic too. wait to hear them before you leap. >> rbc raising the target on lvs. >> this is to me a bit of a surprise because it's china. i don't want to buy this trade. >> edwards life sciences

jeffries upped that price target. >> do not understand the power of this new technique they have for open heart surgery. really makes the whole thing go without giant chest opening. >> and walgreens earnings. >> not bad. come on. not bad. the stock is at 35. guys, read through the release. this is not that bad. this as comeback play. >> all right. before we find out what's coming up tonight let's get to rick santelli and get sentiment numbers. rick? >> what is it? 78.3. now, this is very important. that isn't a bad number. remember we always have the preliminary and the final. so this is the final read. the preliminary was 79.2. we now throw that away. our actual last reading was the august final at 74.3. it as nice improvement. the high water mark was may at 79.3 the best level since october of '07. we've had higher levels but 78.3

is about the third best so a very nice university of michigan and a very, very weak chicago. we'll have to define which is giving us a better glimpse of the future. carl quintanilla, back to you. >> a split between sentiment among consumers and businesses getting really interesting. >> isn't it? that's the way to look at it. >> yeah right? >> that is exactly the way to look at it. that is why retail sales have leld off. auto sales have held off. one group is positive and the other negative. >> what is tonight? >> itt, new name for me. don't know this. come on. obviously going to flesh it out. sometimes i have repeat ceos. this is a first time. >> a rookie. >> he is a rookie from the show. >> 6:00 and 11:00 p.m. >> yeah. >> speaking of rookies eagles giants sunday night. >> on nbc. i will be there cheering. yes. the eagles. although it's obviously a very touchy time for the team. >> okay. you want to make a call? what is the spread? >> i don't know the spread. you know, it's two or two and a half.

it was two and a half midday yesterday. dropped to two. i can never say that i think the eagles are going to lose on air. >> that's right. >> so even though i think they are i can't say it. i mean, and when the camera comes on, i am not going to say it. >> okay. that's good. >> we're not on right? >> no. we're not live right now. >> thank you. i feel better. >> enjoy the game. see you tonight. "mad money" 6:00 and 11:00 eastern time. talk to you with the ceo of united continental and of course we'll talk about r.i.m. in a moment.

♪ welcome back to "squawk on the street." apologies. let's get to the road map for the next hour. tale of two techs. apple apologies over maps. and r.i.m. shares are up. apple is apologizing and r.i.m. is higher. we have a top ranked analyst to lay it out. >> another earnings mover on the radar this morning. nike the retailer reporting its

second straight quarter of declining profits with weakening demand out of china. hard to ignore, is this the beginning of a broader downturn for nike? >> plus, united continental officially becoming the first airline to carry passengers aboard the dream liner 787. but will the plane that promises to elevate the passenger experience be able to do the same for a company that's had its share of troubles? we'll talk to the ceo in an exclusive interview. >> back to the news of the morning apple ceo tim cook issuing an apology over the apple maps debacle saying the company is doing everything it can to make maps better this on the yields of troubled blackberry maker research in motion posting better than expected results in the second quarter. we have a tech panel to cover all of the headlines. joining us right now will power senior analyst for robert w. baird. will, i'm going to start with you since you cover apple. when i heard the apology the first thing i thought of was would steve jobs have done that? would he have put a maps product on the phone knowing that it

wasn't ready for primetime yet? >> well, that is a very good question. we're not going to have the answer to that. i think ideally perhaps no but there seemed to be some parallels here with antennagate putting out an apology for a product that clearly wasn't up to apple standards. i guess it's a bit of eating humble pie and maybe good for all of us but i have every confidence apple will recover and put out a better product. >> so recover from this and also from possible component supply issues that are now sort of, i mean those concerns are sort of gaining steam a little bit with a reuters report this morning about how sharp didn't ship any lcd displays until last week or whatever the time frame was but basically later than expected. >> well, i think supply is the big question for iphone 5. there is no question about it. we continue to do nightly and daily checks and most of the apple stores and the, the carrier partners that are national retail partners are out of stock as we know so that is something we'll have to continue to monitor.

we still believe given the rollout schedule they've laid out they have their eyes on enough components, you know, to meet demand as we get into later calendar q 4. >> let's switch gears and talk about research in motion since those shares are surging this morning. partly a short squeeze perhaps. but james, i would like to ask you this. can we now officially take bankruptcy off the table when it comes to the r.i.m. story? have we put that behind us? >> no. actually i think it probably gets worse from this point going forward. right now they're able to maintain their cash position. primarily because they're shrinking. as they stabilize or if they are able to stabilize the business and then start to look to build new product around blackberry 10, that is going to require a lot more in cash. they said last night they'd taken out a $500 million credit line. i think they're probably going to use it. i would expect that the cash balances actually start to decline at an accelerating rate at least over the next few quarters. >> so you say gets worse. you put a little bit behind that. give me a little more.

what they, the blackberry 10 is not going to work and they'll just start blowing through a lot more cash? >> well, in the near term, the issue is that as the sales come down and they're not able to draw against their accounts receivable that is going to put pressure on cash. then on top of that when blackberry 10 gets ready to launch they'll have to start to invest in more inventory to build the product and that is going to require cash. then once we get beyond that, we don't think there is going to be a lot of oxygen for them to launch new product into so we think that the products are likely to fare poorly and you add it all up and it looks like they burn cash. >> right. although, james, that doesn't, i mean that actually might -- actually bolsters the argument that they decide to sell. i mean, you're describing someone that is moving toward the position of a motivated seller. what do you make of that? >> they may be a motivated seller but i don't think there are any motivated buyers. i think particularly the service business could end up being, while people look at that as an asset it could end up being an

alba tros. if you look at the industry overall basically if you're not apple you have to subsidize hardware. that is a tough business to get into. i don't know who would want to do that. >> will, where do you stand on r.i.m. at this point? are you any more optimistic than james? >> you know, long term i think i'd agree with james. there's still significant structural challenges as you look at the competitive road map in front of them. give credit where it is due. the company did a terrific job cutting costs, improving the balance sheet to help bolster cash. as you peel apart, peel back layers of the onion it is clear the company was selling below cost to boost subscriber growth and that isn't a viable business model long term. the future rests with blackberry 10 and that is a show me story at this point. >> how do you know they're selling at a loss when they wouldn't give specific asps? >> well, the company has provided some guidance around the services business in the past and so if you make some assumptions for gross margins in that business and we think that could be an 80% plus gross margin business you can back

into it to get you close to a negative 10% type number on our calculation. >> wow. >> and that's tough for them going forward. >> yeah. james, you know, jim cramer in the last hour of "squawk on the street" said r.i.m. could be up for sale at this point. it was a better than expected quarter. they are not dead yet are his exact words. do you think there is buyer out there who might be interested in, you know, the keyboard patent for instance since it is trading at less than half of value? >> yeah. there could always be a buyer. but from our standpoint we think a lot of people have taken a look and taken a pass thus far. and with the way the industry is developing i don't see more buyers emerging. instead i see potentially fewer. >> all right. guys, we'll leave it there. thanks for your time. will and james. >> time to move to another earnings mover. shares of nike trading lower. a first quarter earnings did beat estimates but the profit dropped 12% on weaker margins, higher overhead costs as competition from under armor and lulu lemon heats up what does

nike need to do to stay in the game? our guest, sam, i know you were positive for a while but you definitely saw this weakness coming. what accounts for the compression in margins? is this all about china or is there some general inflationary input costs we need to blame? >> well, it's really hard to get a good view on that because, you know, they basically said it was the mix issue with a lot more business than they expected being in north america primarily the u.s. where business was up $500 million for the quarter. and, you know, the margins on the products in the united states aren't as high. plus they have so much innovative product in the pipeline that until they get scale those run at a lower margin. my big issue with the margins, however, is that the -- they just haven't gotten their hands around them. there is always a surprise. the margins came in 75 basis points lower than last year which was better than their guidance but then for the full

year they actually slightly lowered the gross margin expectations. so it's just about them getting their hands around it. that was one of the reasons that i downgraded stock sometime ago and then china is just getting their hands, getting that business turned around which is primarily an issue of the apparel and glut of apparel in the market there. >> last week this buyback is $8 billion. that is eventually, that could take out a fifth of all the shares outstanding. why has that not lit a fire of enthusiasm even under some longer-term investors? >> i think that, i think maybe they're seeing what i'm seeing where there's really, you know, the stock is going to trade in a range, you know, right now, i'd say 90 to a hundred for sometime until there's just clarity of what is going on. they did a very large buy back in the quarter to clear their prior $5 billion buy back and, you know, they'll take advantage as they said when they do it.

but i think, you know, people are just looking for core growth and probably are seeing. >> right. >> slightly better places to put their money right now. >> all right. sam, we want to bring in our guests, a buy rating on nike a $106 price target. michael, good to have you with us. nike seems to highlight the notion that globally things are not that great. here in the united states, north america things are okay. nike branded sales were up 23% by revenue in north america. at the same time, under armor, luol lieu lemon, they compete very heavily here in the u.s. how concerned should we be about the 23% number and preserving that in future quarters? >> i think that's, you know, a little artificially high because they do have the first year of the nfl license. that is a new business for them so that is propping up the number a little bit on a year over year basis but overall even when you exclude that they have very strong double digit numbers well into the teens and i think nike is competing as well as under arm our or lulu in the women's category in the u.s. no question. >> yeah. in terms of china, michael, i

wonder if you think there is hope there because future orders were down so significantly. what can nike do if anything or is it simply a macro story we have to sit back and wait for the china economy to do better? >> that is part of it. you can't let them off the hook on that. i think they are being very aggressive. i was in china last week and it was a lot of the local brands and retailers there. we did get a sense that china wouldn't be quite as bad as it was on the report last night from some of the bigger retailers there. but we definitely heard from the athletic market that there still is a lot of inventory cleaning going on and so it's kind of a wait and see there. i don't want to say, you know, it's, you know, hard to bet against china. they're still going to grow that place. there is a lot of room for nike to grow their grand there but they have work to do in the near term. >> what was your big, give me a sense of your big takeaway from your trip to china. just curious overall not just nike. >> it was a lot of loud and noisy data points. the local brands over there told us that, you know, they're seeing orders from their retailers for the near term down

anywhere from 20% to 30%. they're definitely getting hit worse than the global brands like a nike or adidas for example. the big retailers that dominate more than half of nike's sales over there are not seeing order trends nearly that bad for the global brand like nike to do this. >> interesting. i think what's interesting, sam, is, i mean, just to understand what a large anchor china is around nike's heels, is that yum is down and people are largely speculating that the yum, a big china story, is down because of what nike is saying. it is a macro story. >> well, i think it is but i think also that the chinese consumer is so different than the american. i think a lot of companies have gone into china thinking they can quickly apply sort of the western way of doing business into china and they're finding that the chinese consumer just, you know, is much younger. doesn't have the brand loyalties that other -- that other western

economies do at this time. and they might have just gotten -- might have thought they had it and then the consumer moved fast and moved past them to a degree. >> right. >> and, you know, they just have to get to know the consumer better. i believe the nike brand is two stories in china. foot wear on one side which is i think very strong and apparel on the other. i think they think of them totally separate. >> the younger consumer in china may not be brand loyal but they do love their brands and so plik l i'm curious when you were there was the competition for nike primarily the other international athletic foot wear and sports wear companies like adidas or, you know, in the china market is it a leaning? >> well, i think it's -- it is a -- a two-prong story. in foot wear the nike and adidas product really stands out from the domestic brands. on the apparel side it is a little less differentiated, a little harder to differentiate that product so that is where they're probably getting snagged the most. they did talk about that a bit

last night with, you know, normally i would say nike needed adidas probably don't compete that much with the local brands over there at all but the brands are on such heavy discount that the point as they're trying to clear inventory that perhaps nike and adidas are losing a customer here on the margin to them. that is probably magnifying a broader consumer slowdown right now than they would normally face from competition from those companies. >> interesting stuff. not just about shoes, guys. thanks so much. appreciate your time. >> thanks. >> we'll see you later. >> we have a market flash. over to jackie . >> one of the stocks under pressure today united stocks this one cut by oppenheimer to a perform. they were saying they liked utx because of some of the moves it made in 2012. some of those acquisitions for growth and margin expansion. they were hoping to see that play out in 2013 but not so sure at this point. there are a lot of head winds out there. china and europe to name a few. we are seeing that stock lower today and just to point out as well numora cutting the price target to 84 from 86 on this

company. >> thank you very much. rise and shine. united continental getting its first boeing 787 dream liner but will the plane that promises to elevate the passenger experience do the same for a company that has repeatedly hit turbulence? we'll talk to the united continental ceo. >> later, feeling let down by apple maps? maybe you're lost looking for the golden gate bridge? new rival promises to help you get by with a little help from your friends. we'll show it to you straight ahead.

♪ come fly with me let's fly let's fly away ♪ united continental officially becoming the first airline to get the much hyped dreamliner 787. we're joined now by our own phil lebeau and united continental holding ceo jeff smisek for an exclusive interview. >> reporter: thank you, david. we are here with a mock up of the 787 dreamliner. united being the first u.s. airline to take delivery of the dreamliner. jeff smisek joining us for an exclusive interview here on "squawk on the street." you and i were talking before during the commercial break. the operational performance of this plane, you believe it's a game changer, right? >> i think the airplane is a game changer from the customer perspective, phil. with the interior and the higher oxygen continent and humidity, big windows, big bins. it's a home run from the customer perspective and for us as the operator a very fuel efficient, maintenance reliable

airplane. so it'll be good for us. >> at the end of the day this is about fuel consumption in this inland. you talked with your partner. what are you hearing from them in terms of fuel consumption? is it meeting the metrics, what was planned? >> yes, it is. they're excited. a & a is a good partner. we have a joint venture across the pacific and a & a really likes the airplane. i'm confident we will, too. >> as long as we're talking about metrics and operational performance, you guys have had a rough time in the last couple of years. and, specifically, this summer you've had a rough time. on time performance has been atrocio atrocious, below the industry, dead last among the major carriers. what do you say to your customers? why is this happening? >> we had a really bad operation this summer, phil. no question about it. it wasn't we didn't deliver the product that our co-workers wanted. we didn't deliver the product our customers expect. we threw a lot of change at our folks very quickly. we redeployed aircraft. we did a lot of things all at once. we made some mistakes.

we fixed those mistakes and we're back. actually our on time performance this month is above our goal and we expect to pay an on time bonus. i think you'll see us return to the level of customer service and reliability that people expect from an airline like united. >> with that said, you put this merger together. people look at the integration of your reservation system or your frequent flyer programs and people say, it shouldn't have as many bugs in the system as it does. last month the reservation system locked up for several hours and there were people, we heard, i got an e-mail from somebody who's out of houston, one of your customers and he says i'm tired of this service. what do you say in response to that criticism that you guys should have planned better? >> well, obviously when things like that happen we apologize and try to recover as quickly as we can. that particular outage was actually shares, the service was working fine. it was a connectivity issue with a third party unfortunately and those things unfortunately can happen from time to time.

>> let's talk about jet fuel. delta has bought a refinery. they are going to be getting jet fuel from that refinery. we know you guys have looked at least at that set up. >> sure. >> and have said does it make sense? for now it doesn't. can you see united buying a refinery at some point? >> we aren't ruling anything out right now. we have a front row seat and free popcorn and get to watch delta. if it works for delta it can work for us and is kpreetly reproducible but we'll watch and see what they do. >> what is your outlook for jet fuel? is it your expectation that a year from now we're looking at jet fuel up 15%, 20%? >> i don't know. we're no smarter on jet fuel than the next guy. we look at the curve and we plan for that. that is why we're buying airplanes like the 787. it is a very fuel efficient airplane. 20% more fuel efficient than the 767 it replaces. the best hedge for us is a modern and fuel efficient fleet. we're investing in just that. >> your dreamliner is going to be configured to have 219 seats.

first flight from houston to chicago starting next month. how quickly then do we see the dreamliner enter into your fleet particularly here in the united states? i know these are per focfect fo long hauls but here in the u.s. how quickly will people say there is the dreamliner. i have a chance to fly on it? >> we're flying it around the domestic system first one to show it off to co-workers and customers and get the operational experience we need with the aircraft. we'll then fly it principally from the gateway hubs and long haul flights off the west coast to china, to japan, off the east coast into high yield markets for example heathrow, over time we'll fly houston. this airplane is designed for really long haul flying. that is how we'll use it. >> because of the long haul routes, the world is becoming a smaller market place if you will in terms of the airline industry. >> it is indeed. >> will we see consolidation on an international level where the rules are changed here in the u.s. so that there could be a

foreign company, a foreign airline taking a larger stake in the u.s. airline or do you think that's dead in the water and not a chance of that happening? >> politically i think it's dead in the water. we just don't see any appetite in washington to change that. >> would you like to change it? >> i think having free flows of capital across borders, that is always good for business. but if i'm going to spend my effort in washington i'm trying to get things fixed i'd rather have the heavy tax burden fixed or have a modern air traffic control system in the united states long before i'd work on foreign ownership and control. i think that is a real uphill climb. >> you don't think it is changing any time soon. >> no i don't. >> last question. this has to do with the idea that as we see the middle eastern carriers come into the u.s. more, they've had a huge impact in terms of hurting the european carriers. is that a potential problem here in the u.s. that as they grow

their business in the u.s., given their set up, that it could have a detrimental impact on the u.s. airlines? >> absolutely. it's a risk. a number of those are heavily state subsidized. when you need more money you just open a valve and oil flows out it is pretty hard to compete against that. >> from your perspective as you get ready to fly the dreamliner we'll see it first here in the u.s. but eventually we'll see this more on the long haul routes. >> absolutely. and i hope you get a chance to fly and it is a spush airplane. >> starting in november. jeff smisek chairman and ceo of united joining us on "squawk on the street." guys, you heard him. the plane goes into service next month. >> thanks, phil. got another market flash. this time within the social media space. back at hq with the latest. >> facebook really bucking the trend today up just about 5%. reiterated a buy at topeka. the price target there 36 bucks. pretty far from the 21.26 where we are now. the firm saying checks are showing sponsored stories are

getting traction. and they're pleased with the performance both on the desk top and online with the mobile. an interesting take on facebook. >> thank you so much. talk to you soon. when we come back looking for some insight within the travel industry. we've got your inside scoop on what next quarter could offer in terms of adventure in the travel and leisure sector. then later on maybe the long-time loyal research in motion fans are on to something. we'll talk to the head of the so-called rim-pire. will it strike back after all?

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here's what to watch for in travel and leisure for the quarter ahead. the trend in lodging is soft. government per diems aren't helping. business travel needs to lift hotel occupancy through the election and actually in response to it. that will also be critical for next year's corporate rates for the likes of marriott and intercontinental about to thrash out for the hotels that they service. incidentally those two stocks are up 30% and 40% so analysts say be careful. the reits that hold the hotels will likely trade more

properties. we'll follow on offerings for investors. and the hope trade is under way so accelerating yields or could be share holder pain. casual dining this year's drought is about to become next year's commodity head wind. in the burger wars value appetizing will increasingly be pitched against expensive remodeling possibly hurting everybody they say in the industry. that's a q 4 t and l check. i'm simon hobbs. >> amazon is planning an online market place for wine sales, the second attempt at selling wine to consumers after problems with a partner prompted it to end the first attempt three years ago. "the wall street journal" says amazon held a workshop in napa this week. amazon plans to charge wineries a 15% commission on all sales as well as a monthly fee of $40. the drought of 2012, how much longer could it affect what it costs to feed your family? just how bad was it? which crops were hit the hardest? we're sorting through the data

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here's what to watch for in the energy markets in the quarter ahead. currency fluctuations, namely a weaker dollar and a stronger euro due to further monetary easing from central banks around the globe could certainly support oil and other commodities. but economic data that shows a weakening demand picture around the world could pressure prices.

the biggest impact may come from geo political tensions. if israel attacks iran we know oil prices will spike but the question is how high and for how long? that's your fourth quarter channel check for the oil markets. i'm sharon epperson. >> our thanks to sharon for that. one hour into trading some of the stories we're squawking about. 7:32 on the west coast. 10:32 on wall street. ge one of the chips bucking today's decline. hitting new 52-week highs. chicago pmi falling more than three points in september to 49.7. the number below 50 marking contraction in the midwest manufacturing for the first time in three years. the university of michigan's consumer sentiment index showing a final september reading of 78.3. that is down from mid month levels but up four points from august numbers. >> the usda without with the quarterly grain report this morning so just how bad was the drought of 2012? jane wells is still here in new york city. can't get rid of here. glad to have her. she is going through the data to

give us a closer look. >> reporter: it is more of a reflection of what is happening before the drought. today's report shows a lot more corn and wheat has been used this summer than expected. corn stocks as of september 1st were under a billion bushels the lowest level in eight years. the street had been looking for a little over 1.1 billion bushels. corn jumped on the news after many traders had been liquidating positions going into today's report. also a little surprising, wheat supply is lower than expected. 2.1 billion bushels the street looking for 2.3. ac trading tells dow-jones this is not due to a boost in exports but suggests that a lot of live stock producers switched over from corn to wheat as feed this summer. however, the government also says total wheat production for 2012's season is up 13% from a year ago with improved yields matching the record of 2010 at 46 bushels an acre. finally mixed reaction to soybeans. the last i checked they were up. they moved up yesterday on concerns of tight supplies. stocks as of september 1st were a little higher than expected.

169 million bushels. the news comes in the middle of the year's harvest after the drought so we really are still waiting to see how the drought is going to shake out. farmers are concerned about the farm bill. it expires sunday. congress left without approving a new one. the hang up appears to be mostly the debate over foodstamps. yes. nutrition programs are in the farm bill. farmers are concerned about what this means to taxpayers subsidized crop insurance, disaster relief but it appears most current programs will continue under a continuing resolution except maybe some tax money that goes to compensate dairy farmers and milk prices fall. piper jaffary says investors should consider the expiration a buying opportunity. they don't think a lot is going to change and they favor deere and monsano right now. >> we should note even though the drought of 2012 is over in terms of the head winds food producers will make that is about to hit next year. >> yes. we'll see that now. there is a lot def bait over whether this drought was as bad as people say or maybe the harvest will be better but they

are starting. we're already starting to see it in the live stock markets they've been slaughtering chickens earlier or hogs or beef earlier. that means in the short term lower prices for the meats, higher prices next year with fewer animals. >> i think bill karins, one of the weather men over at msnbc, jane, said in oklahoma people were literally dancing in the streets this week when they finally got some rain. the sentiment in the midwest over the drought has been tough. >> the rain is too late for corn this year. >> yeah. absolutely. knee high by the 4th of july. thanks. we'll see you later. let's get another market flash right across from jane. >> tesla ploet ears 2% pop for this stock today pricing the offering of 6.9 million shares of common stock at 28.25 per share. that's less than a 1% discount to the closing price yesterday. tesla giving goldman the underwriter a 30-day option to buy an additional 1 million shares and also the ceo said he'll spend a total of about a million dollars as well to buy the stock. we're seeing a pop there 2%,

29.05. >> thanks very much. when we come back how can corporate america start spending cash on more than just a stock buy back? faber has the man with the answer. deal maker extraordinaire, blair effron next. >> still to come finding a slight bout of road rage on the morning commute? we're looking at a hot new app that is curing your traffic headache by saving you time and gas money. don't miss that. [ male announcer ] let's say you need to take care of legal matters. wouldn't it be nice if there was an easier,

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i'm happy. i'm happy. i'm happy. i'm happy. i'm happy. happy. happy. happy. happy. (together) happy. i love logistics. trading tools for all. like our all-in-one trade ticket. we put strategies, chains and positions all on one screen. start trading today with optionsxpress by charles schwab. what is it going to take to get corporate america to start spending its cash on more than just stock buy backs? our next guest should know as a founder of the advisory firm center view partners blair effron spends a lot of time in the c seat and we spend a lot of time talking about them. glad you're here. >> thanks for having me. >> what we spend time talking about is the unwillingness to spend much money on things we typically see ceos being willing to spend it on. not just acquisitions but plants

and investment in general. why aren't they willing to do it? >> i think first of all companies are spending money but they're spending it toward productivity. where they're not spending it and where you want to see more obviously would be m & a. would be in areas of investment and i think to do that you need to have more certainty for a ceo for a board room to want to make decisions and think that they're going to be paid for taking the risk for doing that. >> why isn't that the case then? >> i think, and you hear this a lot, the macros generally on a global basis are leading to a lot of uncertainty. as you see sovereigns globally trying to tackle these problems hopefully becoming, as we've seen more recently proactive rather than reactive, my own bet is that this will have a very positive effect as we get into 2013 and beyond. if we indeed do this for ceos at board rooms to say it's time to actually make a better decision.

>> is there one thing you run into a lot whether sovereigns or spain or the fiscal cliff in the u.s. that is giving them -- >> i think right now it is more the u.s. and the fiscal cliff. there is a sense that the economy, the underpinnings are good. we've had decent housing pick up. we've had obviously a robust stock market. decent profits. consumer confidence, five-year high. we do have this cliff, 650 billion of head wind, that the private sector wants to see resolution progress on. i do have where i'm optimistic is i do have a sense that those in washington, the administration or congress, appreciate the magnitude of what we face and the negative impact to growth. 200 basis points or more. we don't deal with it effectively. >> although we could have sat here nine months ago and it might have been another issue or two years ago. the level of uncertainty, i

don't know if they're all stigmatized still as a result of the financial crisis but there does seem to be a general worry always about uncertainty that we never heard about as often back in the day. >> that is a fair point. i think that ceos more than ever are managing to uncertainty. obviously that is part of their job profile but i think it is important to keep in mind that the market is at a five-year high. companies are being rewarded for showing the right strategic and financial moves, getting the right growth. the fact is we live in a more complicated world than we ever have. i do believe that certainly in the u.s. the corporate sector has done a good job managing through that uncertainty and, in fact, has increased competitive gaps on a global basis versus companies in other countries. >> let's talk a bit about the consumer. you advise companies in a variety of areas but have been known as a consumer banker perhaps first and foremost.

what are you hearing from the ceos at those companies in terms of the health of the consumer? what is your opinion? >> my own opinion is the consumer is in a stable pattern but holding pattern. spending a bit more. confidence rising. you see that in retail sales. but that said, the notion that behavior has changed i think permanently absolutely a part of the equation. that really is across any income level. people are much more -- >> what does that mean? >> this question of price value relationship matters more than ever. number one. number two, you're going to go to the store. you're still going to be a just in time shopper. you're going to buy three instead of five. and that, what that does for a company is fundamentally make it very difficult to offer product that is not either strongly promoted or -- >> that behavior is here to stay? >> i think it is. certainly to stay for the foreseeable future absolutely. >> as we head into 2013, what is

your sense in terms of the willingness of the consumer to spend more? we talked more on the show, the savings rate is down a bit. does seem to be a positive. we still get stuck on the fiscal cliff and what it's going to do to gdp. >> so coming from someone who has historically been very tempered on this question, i actually am more optimistic than most that there is an upside in 2013 to the 1.7% gdp cbo estimate, that that is where we head. and what does it take to get there? it does take solving some of this uncertainty. from a policy perspective which i do think will continue to set the underpinnings. >> you seem to think there will be some resolution. >> i do. i think there is an appreciation this is the biggest priority we face as a country and i think on both sides of the aisle and i think there is an appreciation that you don't do it, you sta a

start off with cuts, 50 billion from defense, 50 billion from important programs. nobody comes ahead from either side of the aisle and certainly the american public does not come out ahead. >> you have built a very successful firm, gotten very nice press lately at center view. while the industry has been suffering to say the least. what do you make of 2013 as we head into it? i hear that we're going to see so many big investment banks still need to cut both compensation and perhaps head count. >> so clearly the industry remains in a period of transition. it's been like this for a few years. but i think it's important to recognize that this industry has always had periods of transition. just in my career, 25 years, i can think of three different cycles. the industry always comes out on top on a competitive basis globally. i do think we still have the most intellectual capital anywhere in the industry. the most innovation. and you already see firms doing

what they should do to get to the right place. they're focusing on businesses where they can get the best return and they're fundamentally deemphasizing businesses where they're not. >> how much longer in this transition in your opinion? >> i think that as you get toward the end of 2013 you're going to see a much more robust, much more healthy financial industry. i do. >> you know, i'm just curious. you are an outspoken supporter of the president and his re-election. it's widely known. do you -- you're part of a cohort i would say has shrunk quite a bit over the last four years. do you get heat from a lot of your brethren out there? >> first of all, i actually think it's a little more balanced than some of the media would indicate. there are plenty of very senior people in my industry supportive of the president. you see it in terms of their contributions, what they've done publicly. the support is obviously there. >> not the way it was. >> i accept that. i accept that clearly. and you have two big issues.

you have dodd/frank which are difficult for the industry. and you have this question of language during a campaign and finger pointing. that said, i'm more focused on the substance rather than cosmetics and i think on the substance the president and the administration have been favorable to the industry beginning with t.a.r.p. and helping to set a framework which the market is at a five-year high. >> we didn't mention mergers and acquisitions. we're out of time but give me a quick prediction in 2013 after what has ban very disappointing year. >> better than 2012 or we have a big problem. yes i believe it will be better. >> thank you for joining us. blair effron center view partners. carl. >> thanks, david. when we come back president of france's first annual budget putting a large tax on the rich and large companies to slash the deficit. will the wealthy flee in

response? first rick santelli is working on the next hour of "squawk on the street." hey, rick. >> hi, carl. you know, yesterday when the spanish budget came out people on the floor were running around. i grabbed one of my sources and said hey. do they like it? he goes they must. stocks have rallied. when did the stock market become the validation for all economic fundamentals? we know that quantitative easing distorts stock prices. this is the topic. the real topic is lest we forget because there have been stock markets in the past like the nasdaq that have important lessons for us to learn and we'll go over all of that at the top of the hour. [ horn honks ]

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the government unveiling sharp tax hikes on big companies and the rich today in his 2013 budg budget. the budget including spending cuts to reduce the deficit. what's the impact of what may well be the world's highest tax on the rich? robert frank takes a deeper look at that. >> thanks, carl. i never thought this would actually happen but the budget unveiled the new budget and it's bad news for france. people in france who make more than 1 million euros a year will

have to pay 75%. i'll say it again because it's an amazing number. 75%. this would only affect 30,000 taxpayers and bring in a few hundred million a year, but this would be far and away the highest tax rate in the the world. so let's take a look. we have a chart. france, look at that. number one at 75%. number two is 58% in aruba. the u.s. on the chart ranks 35 on the list with its tax rate of 3 35%. the question now, carl, is whether all these taxes will lead to job flight from france. now tax lawyers i interviewed this morning say they are getting a fairly normal volume of calls. but that's because most people have made plans to leave. we talked about one. bernard arnault. he's applied to become a citizen of belgium.

he said it wasn't for tax reasons, but it now looks cheap by comparison to france. they are also looking to switzerland, singapore, and even new york. we may start to hear some french accents on the upper east side. >> a few more. we were just talking onset, maybe they just go to monaco. >> that's a big destination. it's increasingly expensive, but they are looking to singapore. and london, the british government said we're going to roll out the red carpet for the french wealthy, even though britain is considering new taxes on the rich. >> robert, 30,000 people, that's it? that's a rich country. aren't they already shielding their income? >> they it definitely are. compare that to the u.s., where we have 250,000 people who earn that. it leads many to say this is m

symbolic. it was done for plit ral reasons than for revenue reasons. >> you may 75%, but you get to live in france, right? there is that. >> that gets to be a high cost for good baguettes. >> great stuff. thank its. still to come, the league of blackberry fans that won't give up the fight when when it comes to their favorite device. they would be right and what did they know that investors don't. the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

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as we approach the one year anniversary of the passing of steve jobs, one museum is paying tribute. you're looking at a museum in hong kong that just unveiled steve jobs in wax. as you probably expect, he's dressed in his flr black turtle neck sweater. it was inspired by photos from 2006. how do they do this? >> that's an amazing likeness. as the week comes to a close, we're out ego hunting. this rocket can only mean one

thing. it's the first animation on cnbc and it's time for e ego trip. there were a number of great entries this week. who had the biggest egotrip of the week? the nfl referees who made their return to the game or bacon lovers or perhaps blackberry devotees? so you want to cast your vote. the winner will be unveiled on street signs this afternoon. >> one thing about the refs, the bar was low. all the refs had to do was come out and not make some horrible calls and they were going to get cheered. just don't lose $2 billion in cash and you'll will applauded. >> i try to live that way myself. keep expectations low. >> exactly. >> you're working tonight? >> of course. we'll watch the moodies

downgrade. traditional they come out after the close of spain. it usually happens around 5:00. that's right around when options is on. >> this is sort of on their mind. david, as we said earlier in the week, that could set in motion a series of events that would not be good. for borrowing, the vicious circle. >> the ratings agency still has a great deal of power. there are borrows of certain types of debt not permitted of buying of that debt if it gets a certain waiting. we're waiting to hear the results in how much the banks are going to need. we should find out in the next hour or two. >> have a great weekend. if you're just joining us this morning, here's what you missed earlier on. welcome to hour three of "squawk on the street'.

here's what's happening so far. >> the interesting thing is that people knew it was flawed for decades. no one did anything about it and nobody seemed to care until all of a sudden everybody cares at once. that's kind of the history of financial scandals. >> it was important to execute against this quote and the challenge we face. there's many steps to come until we launch blackberry 10. >> there's a question e as to whether steve jobs was still alive and running the company and the maps would have been released. >> the first question out of the gate, i'm devoted to the blackberry. i have mine onset here. i love the keyboard. but i am seriously considering going to the iphone 5. and that incaps lates the problem here. if this is the only thing from keeping me to holding on to this, that's bad. >> we have september purchasing manager and it is a big number.

but not in the right direction. 49.7. >> we didn't deliver that our co-workers that our wanted to deliver. we didn't deliver the product to our customers. we did a lot of things at once. we made some mistakes. we fixed those and we're back. happy friday. welcome back to "squawk on the stree street." we're get another check on the markets. the dow was down again. currently down 92. all three averages are on pace for their biggest drop in 17 weeks. s&p is down more than. facebook showing big gains today. and mcdonald's the biggest loser on the dow after getting hit with the downgrade.

the firm says industry sources say burger sectors comps for the first few weeks of september could be the worst month for the year so far. let's get to the road map. after more than a week of user complaints about maps, apple's ceo is issuing an apology to customers. is that a sign of strength? also the map app recommended to users, the ceo of waze will be with us. and the rim-pyre strikes back. signs of hope for blackberry. we'll talk to one of the biggest blackberry enthusiasts around, the founder of crackberry.com. and an audit of spanish banks. how will markets around the globe react when that data is released in an hour's time. we'll find out. but we'll start with news out of the fed on which banks borrowed the most money u during the cry

ses. steve leaseman going through that. >> just getting them now here, carl. a new year of disclosure. now a mandated year of disclosure coming from the dodd-frank legislation. banking reform legislation that mandated the release with a two-year lag all of the information from everybody who borrows from the federal reze e reserve. how much they borrowed and who the names were of the borrowers. we're getting the data now. the issue here, the federal reserve has maintained that disclosing this data would put a chill on borrowing. we're getting one quarter of data two years ago. this was an era when it was disclosed and there wasn't a lot of borrowing. that will be the question. plus the names of who borrowed and how much and the why. >> all right. we'll talk to you in a bit. thanks a lot. let's jump over to apple. as we said, tim cook issuing this apology for the maps app.

john ford is live with the latest. john, your reaction to something we just don't see that often. >> i used to call these rare apple apologies, but they are becoming more common now. they apologized for changers with retail workers without. now it's the strongest apology yet. tim cook says he's sorry for the frustration map errors are causing customers. this is evidence of a new leadership style from apple. and the other incidents i mentioned. but this is easily the most challenging problem apple faced in the cook era and that's because unlike the other problems, this one is a problem with the product. it comes as an interesting time. iphone 5 laumpbling in 22 more countries today. and apple maps aren't turning out the strongest results. on the positive side, customers with the iphone 5 seem happy with it.

surveys show people are less satisfied with ios6 than 5. if you're an android user thinking about switching to the iphone, this is a red flag for you. some people will still do it, but it makes apple's job that much harder. this is also a hard problem to fix. google is constantly updating maps with actual cars from people updating maps. apple has to find other data providers to match that collection. it will be tough. >> all right. john, thank you for that. for more on the apology, want to bring in scott sutherland. good morning to you. >> good morning. >> i'm trying to put my mind in the minds of the apple execut e executives who decided to put the apology forward. sto what degree does it force customers to say i'll take a

pass on the 5 after all? >> when i look at the map the lix, it's something on the fringe. it's not a reason to go out and buy the phone or not buy the phone. it's the largest screen size and faster speeds. >> we heard eric smith earlier in the week saying they are not going to bring out a google maps app any time soon. are they letting apple twist a little here? >> i think for anyone who got used to the google maps and anything on those maps clearly this could be a bit of a reason not to go out and buy the next iphone. . but there's many other applications out there. great applications like waze, provide their own. and most of these can be downloaded on the current iphone so you're not missing too much. >> in the meantime, the stock is down since the time of the launch. it did rip a little higher. typically, historically, the stock tends to fade post a

product launch. but given all the concerns about supply, about the screens, about maps, how would you characterize the strength or weakness of the stock given the expectations for the 5 to begin with? >> i think first we see a buying opportunity for the stock. maps isn't having too much impact on the sales. we're seeing a lot of demand. more iphone 5s sold in the opening weekend than the 4. plus the ipad coming out. we think as they report the numbers for the september and december quarters, the stock moves higher. >> have you changed your estimates for the quarter overall? >> we're reasonably concerned within our model of 6 million iphone 5 units that we thought the opening weekend looked better than that. but that's a good problem to have when you can't meet the

dema demand. . >> a competitor of yours, ubs says they think they will hit a rough patch because of the supply issues. they think it's temporary and the situation will recover. by when do you think that will happen? is that a matter of weeks or months? >> you know, this looks like it's a matter of weeks. apple still has a broad rollout globally. 100 countries in the december quarter. i think they will have some of the issues worked out. i think you're going to see material ramp in the production and the devices. so what they miss here in the september quarter, i think they will start getting back in the december and march quarters. >> and finally, what's your target on apple and what kind of valuation? what sort of assumptions do you have in your model for 2013? >> we have an 885 dollar price target. that's over 50 dollars per share in earnings. over $100 per share in cash.

so this is a multiple still. >> some argue the one reason for the low multiple is no one believes they can continue to beat the laws of large numbers. scott, thanks so much. have a great weekend. >> great. thank you, you too. >> let's get our capital markets op-ed. talking some cash flow issues. >> let me start by saying i happen to be a big fan of blackberry. probably one of the few remaining. i sit with two blackberries every day. i hope this company survives. i went through the research and most of it is till cap junk and garbage. i went through the research reports and through a lot of the newspaper stories that talked about what happened in terms of the quarter. the only thing that i felt really hit it on the nose was the paper that does an alleged column. the only relevant matter in terms of if you're thinking

about buying or selling the security today, this is what changed. cash went up $100 million. that came basically from the $432 million in operating cash flows during the quarter. remember, cash flow you can lie on a balance sheet and play games. you can play around with earnings per share. one mentor said, if you let the operating cash flow come and get you, it can bite you in the ass. $550 in cash came from reductions in working capital and inventory adjustments. that's a one-time event. if you take that out, it's still burning cash. at the end of the day, if you're a long-term investor here, you'd want to see cash coming down. this is the reason why. you'd want to see the company spending money, marketing, doing whatever they have to do to get the buzz up for blackberry 10. so a long-term investments see cash coming up.

the call ends by saying this movie is likely to end badly. speaking of movies ending badly. i want to go back to monday when we talked about the fed and the idea that things may end badly. you probably got that note that if you go back to today's action in terms of the s&p, we're right back to september 12th and where the s&p was before qe3 was launched. >> yeah. it was a great ride, wasn't it? all 15 days of it. thanks a lot, gary. great point about the use of cash. let's get to rick santelli. a friday edition of the santelli exchange. a history lesson today. >> it's going to be a history lesson today. because we need to learn a lot from the past and in particular, at a time where the validation of many things from the spanish budget to whether bad data really means anything anymore, it seems the king value day tor

has become the equity indexes. but there was a time when we all used to think this, but it didn't last long. back to october 15, 1999. where was the nasdaq on october 15th? 2731. where did it go in 21 weeks? 21 weeks, it went to 5048. it virtually doubled in five months. we're talking 2317 points. that's the difference. 2317 points. how did it do it? 11 weeks were just straight up. out of these 21, 1906 those 21 weeks were higher.

you want to e see it? here's the chart. i think it's an amazing chart. it really should make everybody think that, yes, markets can go up to the point where they are constantly being used as reasons to potentially view different aspects of the economy and maybe more favorable light. but let me tell you, 5000 did not last long. why? this is really amazing. now go from march 10th to april 15th, which happens to be tax day. in that, that was only five weeks. we shaved 1700 points off to end back at 3321. now a little bit higher than where we are now. let's look at how that turned out on the charts. so the point here is that markets can start to go pair bollic where you get spikes or can take the road that the

equities now are taking where they go up every week, month after month. but the lesson learned unless you know exactly when to get out, sometimes being greedy means looking towards profits you feel confident about. but the trick is actually putting them in your pocket and going home. back to you. >> wise man said, you got to keep dancing while the music is a playing. when we come back, blackberry lovers unite. the stock is soaring in anticipation for the blackberry 10. now fans are speaking out. the founder of crackberry.com joins us to tell us why blackberries are still the best phones on the market. ♪

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let's get a sector check. utilities financials the top performing today. and energy and materials lagging. but we're seeing a lot more red than green after the chicago pmi came in sub 50. that was a disappoint mement. earlier today on squawk, research in motion ce oh, shared his vision for the company's device including the blackberry 10 due out next year. take a listen. >> and we had to make a choice. but finally we decided to bring both versions to market very close to each other. >> now blackberry fans are

speaking out as well. for the few opting for the device, what's keeping them around? the founder of crackberry.com join us. good morning. >> good morning. >> we should point out you're not an unbiassed party. what is crackberry.com? >> it's basically your number one online resource for all things blackberries. whether it's news, information, health, buying stuff for your phone. they cover it all. we're one of the biggest communities of blackberry users worldwide. >> and before we talk about the 10, what has it been like watching the world go mad for the 4s, the 5 at apple, i don't think i'm exaggerating when i say writing off rim for good. how are you guys surviving that? >> it's interesting because the

world for blackberry in terms of the opportunity and challenges are the same as an iphone 4 world. a lot of people expect more of the iphone 5. i think our odds with blackberry 10, what we're looking forward to, apple didn't change that one bit. it's tough because we're wa waiting. we've been waiting for a new platform for a long time. now it's a new beginning. >> let's talk about the quarter for a second. obviously, the loss was narrower than expected. cash on hand was up. they shipped more smart phones than some expected. also good. and the stock is up. so what are your hopes for the 10 and how realistic are you about how big of an operating system this can be in a world where obviously android and apple dominate? >> sure. looking at the quarter, i think the big thing here is cash on

hand. i heard on previous segments you expect to see rim burning through cash on marketing. make no mistake, that's going to happen, but it's coming in the next couple quarters as blackberry 10 marketing ramps up. so what we're excited to see is the cash is still there. a lot of people expected it to be less on hand. so a few months back, we were wondering if blackberry 10 would even come to market. now it's happening. it's really exciting. that changed our perspective a lot. seeing it's going to happen, we played with the phones. this is legit. in terms of the competition, it depends on how you slice it up. apple is going to continue to do well. there's a lot of happy apple customers in the world. you can't deny that at all. android is different. who owns android?

who makes money? samsung. you can't talk about an android selling phones to carriers. it's lg and htc and motorola. a lot of them are not doing well in the android platform. and i think rim has a real shot by own iing their platform and software and having this loyal user who value the experience. they are going to come out of the gates with a strong couple quarters and win back market share. >> i mean you may be an app developer for all i know, but if you were one and you could only develop for one platform, would it be for blackberry? >> that's a good question. here's the thing. you're going to go where people are. there's two ways to look at it. there's a pint up demand on blackberry 10. and a lot of successful developers go to that.

i know a lot of blackberry fans who made a lot of money on blackberries. and apple has more users. it could be an overnight success but there's a lot of stories you don't hear about who are spending a lot of money and not making any money and not getting the download. there's so much conversation. >> final question. how much of the success of the 10 depends on the keyboard? can they make money in a touch screen world? >> i think -- yes, they can make money in a touch screen world. i think they own the keyboard market. there are people who will always carry a keyboard phone with them until they die. 20 years from now, it may not be the case, but for the foreseeable future that's the

market that rim owns. there's no iphone with a keyboard. blackberry owns it. so honestly, blackberry could have a sustainable business just on keyboard phones. . it might be a smaller business, but it could be sustainable. but they are making a full touch. this isn't just a new phone coming out. it's a platform built for the next ten years. apple has the oldest operating system on the market. zen phones we have, rim developed this it platform a decade ago. they are thinking about it ten years from now. they have done a lot of things under the hood that nobody has done to date. that's why we're excited. >> from your mouth to their ear, we'll see what happens. thank you for joining us. good to talk to you. >> thanks for having me. >> when we come back, it's the app that's curing road rage by conquering traffic and tim cook

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welcome back. i'm jackie delawaangelideangeli. the company projecting that its third quarter is going to miss expectations saying it's hurt by a challenge canning spending environment. a lot of companies feeling the pinch right now. their third quarter ends on the 30th of september. they cut to 19 cents a share. that's the range the expectation was for 30 cents. a big cut there. the stock down more than 8%. carl? >> thanks a lot. when we come back, a lot of news out of the eurozone. we'll get the close in the uk. when we come right back. ♪

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it's happy hour in europe right now. the markets there close. a lot of red. some slight green this afternoon in europe in ireland. take a look at london, paris, france, germany, italy and spain. all in the red today. the health of spain's banks is mainly in the spotlight. due to announce their stress

test results in about a half hour. looking at the european market's third performance, they are in the green just like the u.s. germany one of the leaders with double-digit gains. here's how italy and spain faired in q3. they pledged to do whatever it takes to save the euro. we'll finish with a chart of the spanish tenure for q3. right now, just a hair below that at 59.69. the spanish government presenting results of the final audit today. steve sedgwick who helped us get through the budget presentation is live with more on that. hey, steve. >> very good to see you today. act two of a two-act drama. it was pretty unconvincing stuff despite the drama. they come up with a blueprint.

it was popular amongst the big commissioners. they said it was fantastic. as far as the stress test, we're expecting it backed up by the four auditors to come up with a bigger circus of extra capital needs for the big banks. the likes of the large ones are seen as seeing no new capital. the bank years of this world that are e seeing potentially more capital. but the stress tests raises many questions as they answer as well. there are real question marks about the level of bad debts and the valuation of some of those debts that are on the books. whether they need to be written down further nod to go into the so-called bad bank, which is a lot of the toxic assets will be put after this stress test. there are also question marks being raised in northern europe about whether they want to send the credit line down south.

the euros given as a credit line for the spanish banks, now there are rumors that the germans have a sovereign request for a bailout before the money goes south as well. just as an interesting comparison with what happened in ireland when they had their bad bank. they did it at a discount of 58%. right now we're at 40% on the spanish assets. that means there's still a ways to go. hopefully we'll get a little more clarity in this elongated story. carl, back to you. >> exactly right. your point is a good one with property prices and deposits being moving targets, it will be interesting. steve, thanks. let's get to rick santelli in chicago. good is bad and bad is wonderful. >> when you say that, i'm sorry, but i think of that dr. demento

song. they are coming to take me away. to europe where finances are fine all the time. mark grant, in their press release yesterday used hoover esk to describe their budget. do you agree or disagree with the paragraph in egan jones? was that budget proposal a good thing or not such a good thing? >> well, i think like your previous commentator said that the budget was written in brussels. the stress test is not going to be accurate. i'll tell you that before we get it. and the reason is wyman validated nothing. they took the numbers given to them by spain and the banks. it's like european stress test

one where it was solvent and the greek banks were solvent. i don't believe the numbers are going to come out of this this afternoon. >> e we know the europeans were working hard to try to stem or control the funding issues and maybe to some extent even the rates have risen. but the solutions put forth for funding aren't going to create growth. when is the market going to run out of patience or can't we tell? >> i think the market is beginning to run out of patience. by the way, today we should hear from moodies and i expect a downgrade of one or two notches. i will also say to the point that you just raised that shawn egan, who i know and think highly of, he's on point in evaluating the spanish situation. and by the way, my own estimation i think between the regional problems and the bank problems they need a total of

350 to $400 billion. >> wow. the number that i keep hearing, not questioning whether the stress tests are accurate or not, but the number is $60 billion. so you're looking potential for many multiples of those it 60 billion euros. >> yes. i think they released the first tranc tranche. the regional debt of spain is 50% of the central government. plus in november, you have kath loan ya who will vote on whether basically to secede or not from spain. you have economic problems in the country without a doubt. >> one final question before we run out of time, mark. is spain going to ask for a bailout in the next couple weeks in your opinion? >> yes, absolutely, rick. i think the document that was written in terms of the

austerity measures was written out of brussels, handed to madrid, they put it out and i think it's the e precursor of spain laying down and saying we need a full-scale bailout, which is the only way that germany is going to give them any money. they are going to have to be audited. >> mark grant, southwest securities, thank you. carl, it's all yours. >> napoleon xiv was the one who sang that. thanks a lot. we're talking about skepticism with this rally with a couple down days. >> last quarter in the beginning of the third quarter, people were arguing what was going to work in this quarter. there was an argument about buying the united states and fading the global slowdown, which was not a bad argument. but it hasn't really worked out that way. bank intervention as well as what's going europe, take a look at what we have done so far this quarter.

and remember, i'm just going to put up for the month. russell, all the indexes are up. they were saying this is a bad month. the global economy is fading. the u.s. has done well. but not just the u.s. i want to show you the days that mattered in september. they were the days we had federal bank intervention. put up the s&p for the month of september and the two days that mattered is right here. september 6th, then you had september 13th right here. this is september 6th, this is buying bonds and september 13th is the fomc meeting. the day when the market went down, the big day over here, that's tuesday the day everyone was afraid with the riots in madrid that we were going to see the whole deal with spain getting a bailout fall apart. that turned out not to be the case so far.

but what moves the markets is concerns about what's going on in europe. take a look at the sectors and what's been going on. there's been an argument to bite u.s. and fade the economy. sell materials because those are exposed to the global economy. it makes some sense in theory. but the world doesn't act that way anymore. so look what's happened. the overall market has done very well. i'm sticking with sectors for the month. but this is true for the quarter as well. if you're fading materials, it doesn't make sense. it's been one of the big gainers. energy stocks have been big gainers. so a whole market has been lifted because of the actions of the federal reserve. take a look at the global indices. that hasn't worked that well this month or quarter at all. spain, germany and brazil have outperformed the s&p 500. and even china, while it isn't doing great, i'm not making any

claims it is, it's almost on the par with the united states so far this month. my point here, carl, is don't fight ben bernanke. if he came out and said, ladies and gentlemen, me and mr. drogy and i want people to buy stewed prunes, everybody should listen carefully. you may think it's wrong, but i sure would not go out and short stewed prunes on that idea. that's the problem that a lot of people are having. a lot of people are underperforming the market because their ideologies are getting in the way. >> thank you. let's get another capital markets op-ed. gary, talk a little politics. >> we'll get to that in a second. i steered clear of politics for quite some time. but let me talk about a cool breeze about what's happened. think back to mid-august. we did that informal survey.

we asked people what would be the most important factor for the equity markets in 2012. 65% said it was going to be the election, if you remember. it has not been the case since mid-august. and as e we said all along, it's been about central banks. i do think that's going to change. i think politics will once again become something that has an impact on the equity markets. that it will start this week. you'll start to hear about it on morning talk shows and have the debates, which i'll be watching here on cnbc. and those debates will be something that many people will think maybe trigger for something to happen in november. maybe not. i want to talk about one thing you're not going to hear about. and i can assure you you'll hear a lot about numbers. you'll hear about 47%. you'll hear about 1%. but in reading foshs, this is the 40th anniversary, i'm sad and old identify been reading

this for 30 years. it's an amazing read. let me tell you why. this is about the 1% of the 1%. and because of my previous experience, i worked with a lot of these families. and the theme of the forbes 400 is about charitable giving. when i went through it, i learned so much about what many of the families are doing. i can assure you no matter where you tune in next week, you'll hear a lot about 99 and a lot about 1. you won't hear anything about this. and this is so important for every single person in this country. the charitable giving, please make sure you get a copy of this. i know the families involved here. this is what they are thinking about right now. that's what they do with their money. >> my favorite piece is i think is on mr. feeney. a billionaire has given away to where he only has a couple million dollars. he says that's all i need.

what more do you need more money? >> i'm glad you bring it up. you'll hear that here. you'll get that side of the business story. we won't hear it anywhere else. i'm happy you read it as well. >> i'll see you later. when we come back, do you spend hours stuck in traffic? don't worry. there's an app for that. tim cook is recommending that you use it. waze is keeping drivers away from the gridlock and he'll join us for an interview after this break. bob, these projections... they're... optimistic. productivity up, costs down, time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventoyste ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.

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coming up on the halftime report, bank stress test results from spain due out at the top of the hour. it could be a big market mover. our traders will have instant reaction. the chief investment officer tells us why next year is a big one for the bulls. and as we close up the third quarter, we have your play book for the fourth quarter. stay tuned. >> thanks, michelle. tim cook is apologizing for apple maps this morning and offering suggestions for alternatives. waze has 26 million users and provides free mapping. users get traffic updates and information on accidents, speed traps and more. based on the number of people using the app in their area.

the ceo of waze joins us for an exclusive interview. good to have you on the show. good morning. >> thanks for having me, carl. >> i got to ask you. what's it it like being called out by the ceo of apple and has to be one of the most valuable endorsements i have heard lately. what does it mean to waze and are you already seeing a ramp up in usage? >> we have seen a significant ramp up since the release of ios6. as everyone today knows, the maps are not 100%. with that users are looking for other alternatives and waze is one of the alternatives for traffic, navigation and everyday driving. >> you have 26 million users, as we said. you have doubled that between january and june of this year. and one thing i think cook in his apology appears to be trying to make the point you need to give us type time.

mapping the world takes time and input from everyone moving around. how long until you think apple's maps sort of equate or get in the same ballpark as google's maps. >> one of the main differences between apple and google or waze is apple does not own its own data. they have partnered to build its m map. so it's rate of change is dependent upon their partners and their ability to update. so they are using tom tom data and they need to convince them to update the data and they need to prioritize. that's one of the core differences. waze owns our own map. so we allow users to update the data themselves. if you're in minnesota and don't like the maps, go online and fix it yourselves. this way we stay up to date and be more up to date in the traditional maps. >> and when you say users input

information, how does that work? do they have to be plugging in data or is it more passive where just as long as you're driving with the app open, it it will follow you. >> the majority of our users do this it passively by driving with our app, you're contributing data that goes back into the map to improve it. and tens of thousands of users actually manage the map actively. they go online and open up an editor that we have there. they look at different problems that were created, different complaints. they can go in and fix the map. then the map gets rebuilt and changes are available to everyone. think about wik paid ya. same thing we're doing with maps. local people living in their neighborhood are solving problems that matter to them. and that's why we can build a map that's global and we have

users everywhere in the world. the map is global, but we do it on a reasonable budget and we don't have to be google to do it. >> you've been doing this for awhile. you got funding. are you amazed at the degree to which the world at large is talking about map apps? i mean it's been the number one topic of conversation in the business community since the beginning of the month. i wonder if you think the industry is catching ahead of steam? >> i think the main difference we think about a mobile phone or a pc. there are a lot of differences, but the core difference is about local. we know where you are, you're in the real world and can do different types of things. maps are the ui for that. people search for things. this is why maps are so important for mobile today. they are just going to get more and more important as we go forward. at the same time, there are not many alternatives for maps. this is one of the industry secrets that people not in the industry don't understand.

google has google maps for google products. there are limited sources to go out and license this data from, which apple discovered. those sources have their own financial challenges. if you look at part of nokia and tom tom, these companies are not google. they are not pouring billions of dollars. the world today is much bigger than it was ten years ago in terms of where the money is. >> finally, what's the end game for waze? is it thinkable that you go public on your own or destined to get bought by somebody else? >> we believe if you look five years out, there will be two maps of the world. google and waze. in terms of the ability to update and the speed they reflect the real world, we think it will be the two of us. if i'm going to be the second map to google, shouldn't i go public? >> way to turn the tables?

great having you. thanks for your time. >> thank you very much. >> he's the ceo of waze. when we come back, trading. we're back after a quick break.

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welcome back to "squawk on the street." i'm jackie deangelis. equalkom down 1.5%. the firm noting near-term concerns related to the iphone 5 shipments. carl? >> that hurts a little bit. when we come back, nfl refs, bacon lovers, blackberry addicts, who had the biggest egotrip of the week? . since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship.

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introducing the entirely new lexus es. and the first-ever es hybrid. this is the pursuit of perfection. cue the rocket animation. as the week comes to a close, we're out ego hunting. who had the biggest trip of the week? the nfl refs who made their return to the game, the bacon lovers who will see shortage soon, or the blackberry devotees with a new rate operating system? go to facebook.com/cnbc and cast

your vote. we'll unveil the people's champion in the 2:00 hour. rick santelli is looking at the week as well. some of the major averages, not a good week at all. >> not a good week, but not a bad quarter. we're down about 21 points on the s&p. yields, 162. we're down 13 basis points. spanish tenures. they were hovering when they closed. that's up 18 basis points. so the safe harbor trades, we're seeing that rates in spain moving up a bit. today it's going to be interesting momentarily to hear the stress test. equities giving back a bit. i guess we'll have to ask ben bernanke that. >> finally, you ask thought

would ask for more help. he said yes. do you agree? >> i agree. i think the window, all the issues going on, i don't think this is a cycle we want to repeat if they don't request it things deteriorate and needs to be bundled again. >> have a great weekend. >> that does it for us here on a friday. let's get back to headquarters and the fast money halftime. welcome to the halftime report. we're waiting on the results of the bank stress tests in spain. we're showing you live pictures from madrid. the results of the tests very well far more important than yesterday's budget that came out of madrid. is could have a big impact on our u.s. markets. so don't move. let's check the markets ahead of those big things that we're expecting out of europe. the lower by little by